China's idea viewed as source of financing
CHINA'S idea of setting up a Singapore-style Central Provident Fund (CPF) is based on proposals made ''for all the wrong reasons'', according to Stuart Leckie, Asia-Pacific chairman of the Wyatt Company.
''The Ministry of Finance has been looking at the Central Provident Fund in Singapore as a new source of finance. There is a feeling that they are too dependent on groups like the World Bank. But they are looking at it for all the wrong reasons. They want to use it to soak up money,'' Mr Leckie said.
Under the communist model, retiring mainland workers were entitled to 80 per cent of final earnings if they worked all their lives.
''China is concerned because the scheme is too generous and the population is ageing and they have never calculated the cost of the scheme or funded for it. The Ministry of Labour in China really wants to overhaul the system,'' Mr Leckie said.
''It wants to reform the system and put some onus on to the provinces, down to the organisations employing people, so that people start to realise the costs of employing people and promising benefits. That has not happened before and it involves a change to the prevailing mind set, which is that the state will pay for everything.'' Mr Leckie said reforms were needed.
''China needs, like all other countries, to think about financial security for its elderly,'' he said.
''It can come either from individual savings, the government or the employer; all countries need the philosophical debate as to how much each should do. China needs it, Hong Kong is going through it.
''It will be important for China. One thought is to go for a CPF - the danger is the people who are suggesting it are doing it for all the wrong reasons; for a government body to become powerful because it is getting China a huge amount of money.
''I totally agree the Chinese system needs reform, but is that really a good thing for the average citizen of China?'' China plans to use provident funds for many other purposes, including setting up these schemes in the cities to encourage tenants to buy their residences.